Red tape discourages foreign homebuyers in Vietnam

Only 750 foreigners have bought houses in Vietnam since the market was opened up to them two years ago.

Vietnam has granted home ownership titles to more than 750 foreigners since the country opened up its housing market to outsiders two years ago, but industry insiders said the number is not as high as expected.

Amendments to the Housing Law took effect in July 2015, allowing foreign investment funds, foreigners with valid visas, and international firms operating in Vietnam and overseas to buy unlimited residential properties with leaseholds of 50 years.

Before that they were only eligible to buy one apartment providing they were either married to a Vietnamese national, held a managerial position or had contributed to the country.

The Ministry of Construction said in a new statement that the number of foreign home owners following the new policy is nearly six times more than those registered before. Vietnam first started allowing foreigners to buy houses in 2009.

Real estate experts and investors said that simpler procedures could have driven the number higher.

Nguyen Khanh Duy, head of the housing division at consultancy firm Savills, said the number of foreign owners is low compared to the amount of interest they have received since the new rule was introduced.

“Foreigners do not have a clear understanding of legal procedures in Vietnam, while some administrative agencies are not familiar with dealing with foreign clients,” Duy said.

There are around 82,000 foreigners living and working in Vietnam. Industry insiders believe that easing ownership restrictions has created more interest in the local housing market, but they have repeatedly complained that regulations and paperwork are still too complicated for foreign buyers.

But the construction ministry said the current procedures are “really clear and open”.

It said in the recent statement that the number of foreign home buyers is limited by other factors, ranging from their financial capacity to the house prices and locations.

In a move that is hoped to attract more foreign buyers, Vietnam’s Ministry of Planning and Investment presented a draft law this month suggesting that the leaseholds offered to foreigners in special economic zones should be increased to 99 years.

Vietnam has 18 special economic zones and is developing more in Quang Ninh Province near the Chinese border, the central province of Khanh Hoa, and Phu Quoc Island in the southern province of Kien Giang.

Real estate was the country’s best growing economic sector in 2016 with 3,126 new companies opening, a staggering 84 percent annual increase.